Confidence in SNB and Swiss banking wanes as Hildebrand stays on

 
In April and May, and subsequently in October, we purchased euros for a total value of
around CHF114,000 to buy paintings and a boat; the regulations classify these
transactions as the purchase of non-financial assets, and as such they are not subject to
any restriction.

In the critical period prior to the decision to impose a minimum exchange rate against the
euro, there were two foreign exchange transactions on August 15, 2011, in which around
USD504,477 was purchased, costing CHF400,000 in total. The bank statements show two
transactions at the same exchange rate (USD484,477.24 against CHF384,142, and
USD20,000 against CHF15,858 – a total of CHF400,000), because I opened a subaccount for
our daughter; USD20,000 was transferred to this account on my instructions.

This corresponds to around one-third of the sub-account’s value at that time. The large
transaction was requested by my wife – who has always had power of attorney for my
accounts – on August 15, 2011 at 1.20pm, by means of an email to our account manager
at Bank Sarasin, and without my knowledge. As you can see from the PwC report, she
wanted to raise the share of US dollars in our financial assets (liquid funds) to around
50%. The account manager confirmed the request at 3.10pm on the same day, and sent
me a copy. The next morning, I read the bank confirmations and at 7.36am informed our
account manager that, in future, he was not to carry out any foreign exchange
transactions without first obtaining an instruction or confirmation from me.

We had followed rumours that Philipp Hildebrand's wife Kashya made insider trading in the foreign exchange area.

Specifically, it concerned two transactions, three weeks prior to the connection on the franc to the euro 6 September occurred.

The Bank Council – the supervisory body for the SNB – has had to request the president of the SNB's transactions and all account movements of the family to examine retrospectively Hildebrand.

The findings: Hildebrand had done nothing wrong.

A comment on the legal situation: Activities of relevance in terms of penal
law are to be found in the infringement of banking secrecy (art. 47 of the Banking Act),
the possible inducement to and abetting of such infringement, as well as the exploitation
of such activities, but not, in any way, within the area of insider offences (art. 161 of the
Swiss Penal Code

The SNB regulations on own-account transactions conform to European standards.
However, these turbulent times and the exceptional monetary policy circumstances require
a higher level of transparency.

1. Confidence and trust in the Swiss central bank
2. Perceived loopholes in the law that allow these transactions to happen
3. Swiss banking secrecy

With hindsight, if I reproach myself for anything, it is that I allowed the transaction requested by my wife,
who is not informed of monetary policy decisions, to stand rather than acting more
decisively and ordering that all the foreign currency transactions of August 15, 2011, be
reversed.

Bank Sarasin has announced that an employee illegally passed bank data to an external third party. This data concerned currency transactions by the family of Philipp Hildebrand, chairman of the Swiss National Bank.

The employee admitted his criminal misconduct to the bank today.

The employee presented himself to Zurich Cantonal Police on January 1, 2012.

The employment relationship between Bank Sarasin and the employee has been terminated with immediate effect.

Philipp Hildebrand has been personally notified by the bank. Bank Sarasin is extremely regretful about this incident and has apologized to the client for the considerable unpleasantness caused by the infringement of bank-client confidentiality. The bank condemns the misuse of confidential bank data for political purposes in the strongest possible terms.

Bank Sarasin has informed the Federal Financial Market Supervisory Authority and reserves the right to take legal action. Because of ongoing investigations, no further details can be published at this time.

The employee, who worked in IT support, said that he disclosed documents relating to the transactions to a lawyer with close links to the Swiss People’s Party (Schweizerische Volkspartei, SVP).

For this reason, I, together with my colleagues on the Governing Board, will take steps to
ensure that transparency over compliance with SNB regulations is guaranteed fully and at
all times. I am thinking of measures such as the following:

• Members of the Governing Board should be required to submit all financial
transactions exceeding CHF20,000 to the external and internal auditors for a
compliance check before such transactions are carried out.

• At the General Meeting of Shareholders, all such transactions should be published
by the external auditors.

• The SNB’s external auditors should have unrestricted access at all times to all
account documentation of Governing Board members.